Fleet Risk Management

According to data from the Association for Safe International Road Travel (ASIRT), road accidents in the US kill 38,000 people every year, and seriously injure 4.4 million more. Then there’s the fiscal damages – indeed, CDC Foundation tells us that on-the-job vehicle crashes cost US businesses $25 billion every year.

Yes, these figures are distressing – but, when you run a fleet of commercial vehicles, it’s important to understand the gravity of the risks to your drivers’ safety, your vehicles’ conditions, and your business’ cash reserves.

Fortunately, though, the lingering potential for incidents to happen isn’t something you simply have to suck up. With effective fleet risk management in place, you can mitigate against all the potential causes of dangerous road events – keeping your drivers and vehicles safe, and saving yourself a lot of money in the process.

But what exactly is fleet risk management, and how exactly do you go about it? Let’s explore.

What is Fleet Risk Management?

Fleet risk management is the process of addressing potential risks to your drivers’ safety and your fleet’s condition, before they get the opportunity to rear their ugly heads and cause big problems for your business.

It’s all about prevention: namely, preventing road accidents and regulatory violations. This in turn prevents – to put it bluntly – driver deaths and injuries, vehicle downtime, accident liability fines, loss of and damage to goods you’re transporting, expensive medical and repair costs, and heavy fines for violating regulations.

The process involves putting an effective fleet risk management strategy in place, with actions that mitigate each of the risks you and your drivers face – whether those risks come from within (like dangerous driving) or without (like dangerous weather).

Fleet Risk Management: Step-By-Step

So, what should your business be doing to mitigate against the risks that come with managing a fleet? As a starting point, follow our ten steps for effective fleet risk management:

1. 1. Hire. Road safety starts with your drivers. When you’re hiring new driving staff, be sure to perform background checks, conduct drug and alcohol screenings, and ask that they have the appropriate US DOT (Department of Transportation) qualifications.
   2. Train. Before sending new drivers out on the road, educate them in all things safety – from preventing fatigue and distracted driving, to reporting safety issues and incidents. You might decide to make these training sessions an annual thing, so nobody falls off the ball.
   3. Inspect. At the start and end of every day, your drivers must complete DVIRs (driver vehicle inspection reports). Conducted by drivers, these thorough inspections ensure that vehicles are roadworthy, and that faults are seen and reported.
   4. Track. Installing a fleet management system is one of the best things you can do for the safety of your fleet. Using the system’s GPS tracking, you can pinpoint the location of any vehicles that break down or get into collisions, enabling you (or the emergency services) to recover them quickly.
   5. Monitor. 94% of all road accidents are said to be caused by human error. Monitoring your drivers’ road behavior using a fleet management system will empower you to incentivize safe driving, and provide coaching to those who act carelessly on the asphalt.
   6. Maintain. As they say in the medical field, prevention is better than cure. Your vehicles must adhere to a strict maintenance schedule, going for services like MOTs, oil changes, and OBD II system checks regularly. Lots of fleet management systems can help you to keep such a schedule.
   7. Comply. Driver fatigue can be a big safety concern, especially for long-haul trucking fleets – so it’s crucial that you comply with HOS (hours of service) regulations, and the ELD (electronic logging device) Mandate. We’ll discuss those in more depth later in this article.
   8. Insure. Your fleet insurance policy should include (but may not be limited to): liability insurance, collision damage coverage, medical payments coverage, comprehensive coverage (which covers vehicle damage from events that aren’t road accidents, such as bad weather or theft), and uninsured or underinsured motorist coverage.
   9. Review. Carefully review any incidents that do happen in order to decipher exactly what caused them. Dash cams are invaluable here, as they can basically show you the situation through your driver’s eyes. Armed with this knowledge, you’ll be able to put measures in place to stop similar events from happening in the future.
   10. Improve. It’s not enough to put your fleet risk management strategy in place, then move on. You need to continuously monitor its effectiveness to keep improving and expanding on it when necessary. As your business grows and diversifies, you’ll likely encounter fresh risks that call for new measures.

How Much Does Fleet Risk Management Cost?

Given that it’ll depend on a variety of factors – from the number of vehicles you have in action, to the insurance premiums you’re able to secure – It’s impossible for us to say how much implementing your risk management strategy will cost your business specifically.

However, it’s worth being aware of the things that you’ll need to pay for in order to get that strategy going. Let’s take a look at those key costs:

8 Fleet Risk Management Cost Factors

• The size of your fleet. The larger the fleet, the larger the risk, and the larger the premium!
• The type of vehicles you’re insuring. Smaller vehicles (like sedans) tend to be cheaper to insure than bigger ones (like trucks). It’s always a good idea to look for an insurer that specializes in your vehicle type and industry.
• How far your vehicles tend to travel. The farther they go, the higher your premium.
• How you store your vehicles. If you keep them safely under lock and key, the risk of theft and damage is reduced, and your premium may be cheaper.
• Your location. Local crime rates, weather conditions, and more can affect your premium.
• Your coverage limits and deductible. Make sure your coverage limits and your deductible are right for what your business can afford.
• Your drivers’ histories. If someone on your books has a record of accidents, your premium will be more expensive.
• Your credit score. A better credit score can mean better insurance rates in some states.

How Much Could Risk Management Save You?

Yes, putting an effective fleet management strategy in place is a necessary cost – but it can save you a huge amount of cash in the long run. Firstly, using risk management to prevent accidents from happening in the first place means avoiding the fiscal fallout entirely. Secondly, if and when a collision does happen, having the right insurance in place can protect you from some truly hefty bills.

But how hefty? Well, how much an accident might cost your business overall depends largely on whether or not anyone is injured or killed. According to a study by the FMCSA, a truck crash that only results in damage to property will cost, on average, $15,114. Meanwhile, the average truck crash that causes an injury, but no fatality, costs $195,258 – but a fatal truck accident costs an average of $3,604,518.

The Top Risks Associated with Fleet Management

When you’re developing your risk management strategy, it’s important that you understand what you’re up against. So, what are the key risk factors that fleet risk management should help you to avoid?

Dangerous Driving

For our purposes, dangerous driving can come in three forms:

• Distracted driving: doing something that splits a driver’s focus between the road and something far less important – for example, checking their phone, changing the music, flipping between radio stations, rubbernecking, or eating. To help prevent this, address it in your driver training, and refrain from contacting your drivers’ phones while they’re driving (or at least instruct that they always pull over before reading any messages from you).
• Aggressive driving: performing maneuvers that can put safety at risk – for example, sudden braking, tailgating, weaving in and out of traffic, running red lights, refusing to yield the right of way, and of course, speeding (which can be especially dangerous when your driver is transporting heavy freight). In this case, knowledge is power – recording such behavior using a fleet management and/or dash cam system will empower you to stamp it out.
• Driving under the influence: taking to the road after drinking alcohol or taking drugs. We recommend conducting background checks and substance screening to ensure you don’t hire a driver who’s likely to do this.

Driver Fatigue

When we’re tired, our reactions and reflexes slow down, and our judgement becomes impaired. So, whether a driver feels a little drowsy or is basically falling asleep at the wheel, fatigue is a big risk factor.

Driver fatigue is usually caused by sleep deprivation – in fact, the AAA Foundation for Traffic Safety has found that drivers who get six or seven hours of sleep each night are twice as likely to get into an accident as those who get their full eight hours. When just one hour can make so much difference, it’s important to give your drivers – especially if they’re long-haul – the breaks they need.

This is why the FMCSA gives fleet businesses HOS regulations to comply with, and why the ELD Mandate has been introduced.

While HOS regulations instruct fleet managers in how many hours drivers can work without a break, and how long their breaks need to be, the ELD Mandate ensures that these regulations are stuck to. The Mandate rules that the majority of commercial vehicles (there are some exceptions need to be fitted with registered ELDs that can accurately and automatically record HOS and duty status.

Defective Vehicles

While the majority of accidents are caused by drivers, it’s important to understand that sometimes, incidents can happen due to defects with their trusty steeds – that is, their vehicles. Of all the mechanical faults a vehicle can suffer, a report by the NHTSA states that problems with tires and wheels, brakes, and steering and suspension cause accidents most regularly.

In protecting your fleet against such problems, preventative maintenance is key. Getting each vehicle’s oil changed routinely is vital, while your drivers should be checking their brakes and tires with every DVIR. Have a mechanic look over your vehicles on a regular basis, and request a full report that documents any problems. You could also ask the mechanic to check each vehicle’s OBD-II (on-board diagnostics) system for error codes. Importantly, if you know a vehicle is due for a service, don’t put it off – make sure it gets done right away.

Bad weather

The risks that come with severe weather events are obvious: snowfall and frost can lead to slippery black ice, engine failures, and unexpected road blockages, while coastal hurricanes can render roads unnavigable, and threaten the safety of anyone out driving. Even something as seemingly innocuous as rain can reduce visibility and introduce the risk of hydroplaning, while strong wind can blow obstructions into the road without warning.

As part of your risk management strategy, make sure you keep an eye on weather forecasts for each of your routes (some fleet management systems incorporate weather analysis into their reporting, which you might find helpful). You shouldn’t ask a driver to put their safety on the line, so if a heavy storm of some kind is forecast, postpone that journey. Otherwise, for any vehicles that pass through snow, make sure they’re fitted with winter tires.

In instances of rain and wind, encourage drivers to stay alert, go slow, keep a safe distance from the vehicle in front, and drive defensively. If conditions get worse unexpectedly, make sure your drivers know they can stop driving – so long as there’s a safe place to pull over – and wait for things to pass before starting up again, if even it means finding shelter for the night.

How Risk Varies by Industry and Vehicle Type

Fleet Risks by Industry

• Trucking fleets. Often credited with powering the US economy, truck drivers are able to cover up to 650 miles per day – that’s a lot of distance travelled during which something could go wrong. In particular, trucking fleets should look to combat driver fatigue, sticking to strict HOS regulations to ensure that drivers don’t work for longer than they should and become tired out. There’s also a risk when it comes to hazardous freight – if truckers are transporting dangerous goods, such as gases or flammable liquids, it’s important that all the proper safety precautions are carefully adhered to. In addition, trucking fleet managers should also be wary of changing weather conditions as truckers travel from one part of the country to the next.

• Delivery fleets and utility service fleets. Last-mile delivery businesses – think FedEx or UPS – face tight deadlines, with more and more retailers offering ever-speedier delivery times to customers. Meanwhile, utility service fleets – think plumbers, electricians, and engineers – are often called out on emergency visits. When making good time is such an important factor, it can be tempting to resort to aggressive driving tactics, such as speeding. Delivery and utility businesses must be sure to educate their drivers in safe, thoughtful driving, and look to cut back on jobs (or hire more drivers) if there’s too much pressure.

• Taxi cab fleets. Taxi cab fleets face the additional concern of having a passenger (or passengers) in the vehicle alongside its driver. In this case, it’s especially important for drivers to act cautiously. It protects the safety of the passenger, safeguards the business’ reputation (just one hair-raising experience, and they’re unlikely to use the service again), and protects against the costs that would be incurred if an injured passenger decided to sue. There’s also the fact that cab drivers are constantly receiving offers of jobs – in other words, passengers that can be picked up – which can serve as a distraction. Cab fleet managers should ensure that their drivers only receive a new job once they’re close to finishing their current journey.

• Construction fleets. Construction vehicles can be large and mechanically complex, making regular maintenance especially important here. There’s also the fact that, if you hire independent contractors to use your construction vehicles, you could be sued over something that happens while they’re working for you. To mitigate this risk, you’ll need to make sure that each of your contractors has a valid auto liability insurance policy in place.

Fleet Risks by Vehicle Type

• Motorcycles and scooters. Two-wheeled vehicles are great assets in a number of ways: they typically cost less to run than cars, and they can find their way through traffic quickly. But they can also be dangerous, with riders who are exposed to the elements, and smaller, faster vehicles that can be more difficult for other drivers to see and avoid. It is absolutely crucial – and we can’t stress this enough – that riders wear the correct safety gear, especially DOT-compliant helmets.

• Trucks. When a vehicle is barrelling down the highway at 70mph while transporting heavy freight, the risks are obvious. Trucks are not as easily maneuverable as smaller vehicles, making it tougher to get away from sticky situations or keep the vehicle under control if something happens. This is why it’s so crucial that truck drivers stick to speed limits, only take roads that are appropriate for their vehicle’s size (effective route planning should help with this), and stay alert at all times.

The Best Fleet Risk Management Companies

Because fleet management systems can offer so many of the key functionalities called for by a thorough risk management strategy, we recommend these three fleet management solutions and their powerful risk management features:

Azuga: Best for Small Businesses (One to Four Vehicles)

With several unique features geared towards vehicle safety, Azuga is a great option for ensuring that your drivers don’t put themselves at risk out on the asphalt. The AzugaCoach add-on provides automated, personalized coaching for your drivers, while a one-click rewards system enables you to instantly incentivize safe driving. The DriveSafe add-on, too, is fantastic for fighting distracted driving, enabling you to block messaging and app use on your drivers’ smartphones while their vehicles are in motion. Azuga is ELD-compliant, and can also provide integrated SafetyCam dash cams to record incidents as they happen.

Samsara: Best for Medium Fleets (Five to 25 Vehicles)

Samsara is a fantastic all-round product, but it particularly shines when it comes to risk management. Seamless synchronization with vehicle maintenance reports gives you a quick view of your fleet’s overall health (showing whether your vehicles need inspections, services, or even insurance renewals), while customizable live notifications can instantly let you know when a harsh event – such as a collision – occurs. Samsara can also help to motivate your drivers to stay safe, automatically assigning each a safety score and ranking them on a leaderboard for some friendly competition. Samsara is ELD-compliant, offers eDVIRs via its driver app, and can provide integrated dash cams.

Verizon Connect: Best for Large Fleets (26+ Vehicles)

Verizon’s highly sophisticated fleet management system always impresses, and its risk management capabilities are no different. Its fully customizable alerting system (the best on the market, in our opinion) means you can be instantly informed of anything pressing, from dangerous driving and speeding to diagnostic issues. As well as closely monitoring driver behavior and engine performance, Verizon can also help you keep an eye on traffic levels and the weather using its unique Map Layers function, with its weather ‘layer’ reporting on wind velocity, visibility, and surface air pressure while forecasting rainfall and hurricanes. Verizon Connect is ELD-compliant, offers eDVIRs via its driver app, and can provide integrated dash cams.